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EXHIBIT 5(h)
ARMADA FUNDS
PENNSYLVANIA TAX EXEMPT FUND
PENNSYLVANIA MUNICIPAL FUND
XXXXX, XXXX & XXXXX, L.L.C.
SUB-ADVISORY AGREEMENT
AGREEMENT made as of September 9, 1996 between NATIONAL CITY BANK (the
"Adviser"), and XXXXX, XXXX & XXXXX, L.L.C. (the "Sub-Adviser").
WHEREAS, ARMADA FUNDS, a Massachusetts business trust (the "Trust"), is
registered as an open-end, management investment company under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, pursuant to an Advisory Agreement of even date herewith (the
"Advisory Agreement") by and between the Trust and the Adviser, the Trust has
appointed the Adviser to furnish investment advisory and other services to the
Trust for its Pennsylvania Tax Exempt, Intermediate Government, GNMA, and
Pennsylvania Municipal Funds and the Adviser has agreed thereto; and
WHEREAS, the Advisory Agreement authorizes the Adviser to subcontract
investment advisory services with respect to the Funds to the Sub-Adviser; and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish
investment advisory services to the Trust with respect to the Pennsylvania Tax
Exempt and Pennsylvania Municipal Funds, and the Sub-Adviser is willing to so
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT AND DELIVERY OF DOCUMENTS.
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(a) Intending to be legally bound, the Adviser, with
the approval of the Trust, hereby appoints the
Sub-Adviser to act as investment adviser to the
Trust's Pennsylvania Tax Exempt and Pennsylvania
Municipal Funds (the "Funds") for the period and
on the terms set forth in this Agreement.
Intending to be legally bound, the Sub-Adviser
accepts such appointment and agrees to furnish the
services herein set forth for the compensation
herein provided.
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(b) The Sub-Adviser acknowledges that it has received
copies of the Trust's most recent prospectuses and
statements of additional information with respect to
the Funds. The Trust will furnish the Sub-Adviser
from time to time with copies of all amendments of or
supplements to the foregoing.
2. SERVICES OF SUB-ADVISER. The Sub-Adviser agrees that
with respect to each Fund it shall:
(a) Subject to the supervision of the Trust's Board of
Trustees, assist the Adviser in providing a
continuous investment program for each such Fund,
including investment research and management with
respect to all securities, investments, cash and
cash equivalents in such Funds. The Sub-Adviser
will assist the Adviser in determining from time
to time what securities and other investments will
be purchased, retained or sold by such Funds. The
Sub-Adviser will provide the services rendered by
it under this Agreement in accordance with each
such Fund's investment objective, policies, and
restrictions as stated in the Trust's respective
Prospectuses and Statements of Additional
Information for the Funds and resolutions of the
Trust's Board of Trustees.
(b) Maintain historical tax lots for each portfolio
security held by such Funds;
(c) Transmit trades to the Trust's custodian for
proper settlement;
(d) Prepare a quarterly broker security transaction
summary and monthly security transaction listing
for each such Fund.
(e) Maintain all books and records with respect
to each such Fund's securities transactions
effected by it; and
(f) Supply the Trust and its Board of Trustees with
reports and statistical data as reasonably
requested.
3. OTHER COVENANTS. The Sub-Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations
of the Securities and Exchange Commission and will in
addition conduct its activities under this Agreement
in accordance with other applicable law;
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(b) will use the same skill and care in providing such
services as it uses in providing services to
similar fiduciary accounts for which it has
investment responsibilities;
(c) will not make loans to any person to purchase or
carry shares in the Funds or make interest-bearing
loans to the Trust or the Funds;
(d) will maintain a policy and practice of conducting
its investment advisory services hereunder
independently of the commercial banking operations
of any affiliated person of the Adviser. In
making investment recommendations for the Funds,
the Sub-Adviser's personnel will not inquire or
take into consideration whether the issuers (or
related supporting institutions) of securities
proposed for purchase or sale for such Fund's
account are customers of the commercial department
of any affiliated person of the Adviser;
(e) will place orders pursuant to its investment
determinations for each Fund either directly with
the issuer or with any broker or dealer. In
placing orders with brokers and dealers, the Sub-
Adviser will attempt to obtain the best net price
and the most favorable execution of its orders.
Consistent with this obligation, when the
execution and price offered by two or more brokers
or dealers are comparable, the Sub-Adviser may, in
its discretion, purchase and sell fund securities
from and to brokers and dealers who provide the
Trust with research advice or other services. In
no instance, however, will securities be purchased
from or sold to the Adviser, any Sub-Adviser, the
Trust's principal underwriter or any affiliated
person of either the Trust, the Adviser, any Sub-
Adviser, or the principal underwriter, unless
permitted by an order of the Securities and
Exchange Commission or applicable rules; and
(f) will treat confidentially and as proprietary
information of the Trust all records and other
information relative to the Funds and prior,
present or potential shareholders, and will not
use such records and information for any purpose
other than performance of its responsibilities and
duties hereunder (except after prior notification
to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and
may not be withheld and will be deemed granted
where the Sub-Adviser may be exposed to civil or
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criminal intent proceedings for failure to comply,
when requested to divulge such information by duly
constituted authorities or when so requested by the
Trust).
4. SERVICES NOT EXCLUSIVE. The services furnished by the Sub-Adviser
hereunder are deemed not to be exclusive, and the Sub-Adviser shall be
free to furnish similar services to others so long as its services
under this Agreement are not impaired thereby. The Adviser acknowledges
that the Sub-Adviser may give advice and take action in the performance
of its duties with respect to any of its other clients which may differ
from advice given, or the time or nature of action taken, with respect
to the Funds.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records
which it maintains for each Fund are the property of the Trust and
further agrees to surrender promptly to the Trust any of such records
upon the Trust's written request. The Sub-Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act.
6. EXPENSES. During the term of this Agreement, the Sub-Adviser will
pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction
costs, if any) purchased or sold for any Fund.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Adviser will pay the Sub-Adviser and
the Sub-Adviser will accept as full compensation therefor a fee,
computed daily and payable monthly, at the rate of .05% of the average
daily net assets of the Pennsylvania Tax Exempt and .18% of the average
daily net assets of the Pennsylvania Municipal Fund, minus such amount,
if any, that the Adviser has reimbursed the Trust in the event the
aggregate expenses of a Fund exceed the expense limitations of any
state having jurisdiction over the Fund.
8. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the performance of this Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of
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the Sub-Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
9. DURATION AND TERMINATION. This Agreement will become effective as of
the date hereof and, unless sooner terminated as provided herein, shall
continue in effect until September 30, 1997. Thereafter, if not
terminated, this Agreement shall automatically continue in effect as to
a particular Fund for successive annual periods, provided such
continuance is specifically approved at least annually (a) by the vote
of a majority of those members of the Trust's Board of Trustees who are
not interested persons of any party to this Agreement, cast in person
at a meeting called for the purpose of voting on such approval, and (b)
by the Trust's Board of Trustees or by vote of a majority of the
outstanding voting securities of such Fund. Notwithstanding the
foregoing, this Agreement may be terminated as to any Fund at any time,
without the payment of any penalty, by the Adviser or by the Trust (by
vote of the Trust's Board of Trustees or by vote of a majority of the
outstanding voting securities of such Fund) on sixty days' written
notice to the Sub-Adviser, or by the Sub-Adviser, on sixty days'
written notice to the Trust, provided that in each such case, notice
shall be given simultaneously to the Adviser. In addition,
notwithstanding anything herein to the contrary, in the event of the
termination of the Advisory Agreement with respect to a particular Fund
for any reason (whether by the Trust, by the Adviser or by operation of
law) this Agreement shall terminate with respect to the same Fund upon
the effective date of such termination of the Advisory Agreement. This
Agreement will immediately terminate in the event of its assignment.
(As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested persons" and "assignment" shall have
the same meaning as such terms have in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought. No amendment of
this Agreement shall be effective as to a particular Fund until
approved by vote of a majority of the outstanding voting securities of
such Fund.
11. MISCELLANEOUS. The Sub-Adviser expressly agrees that
notwithstanding the termination of or failure to continue this
Agreement with respect to a particular Fund, Sub-Adviser shall
continue to be legally bound to provide the
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services required herein for the other Funds for the period and on the
terms set forth in this Agreement.
The captions in the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by Delaware law.
12. NAMES. The names "ARMADA FUNDS" and "Trustees of ARMADA FUNDS"
refer respectively to the Trust created and the Trustees, as trustees
but not individually or personally, acting from time to time under an
Declaration of Trust dated January 28, 1986 which is hereby referred to
and a copy of which is on file at the office of the State Secretary of
the Commonwealth of Massachusetts and the principal office of the
Trust. The obligations of "ARMADA FUNDS" entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents are
made not individually, but in such capacities, and are not binding upon
any of the Trustees, shareholders or representatives of the Trust
personally, but bind only the Trust Property, and all persons dealing
with any class of shares of the Trust must look solely to the Trust
Property belonging to such class for the enforcement of any claims
against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
XXXXX, XXXX & XXXXX, L.L.C.
BY: /s/ Xxxxxxx Xxxxxxx
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TITLE: General Counsel & Principal
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NATIONAL CITY BANK
BY: /s/ Xxxxxx X. Xxxxx
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TITLE: Vice President
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